Five Basic Strategies to Ensure D2C Performance

In many businesses, managers are looking for the big differentiator to build their brand and revenue – looking for the ideal quick fix, easy solution, magic bullet or category killer!

But if you are a direct response merchant, or a mainstream brand using direct response, the secret to success and achieving your objectives lies not in a magic bullet – but in a formula that revolves around the basics; the blocking and tackling of running a solid business and paying attention to the math. Both for profit and to find the leaks.

Here are some fundamental strategies that will ensure solid performance, whether you are launching a new product with direct response strategies, or managing a brand that isn’t performing as well as you would like.

A. Develop Cost Benchmarks
Cost benchmarks are available from a variety of industry partners and service providers; some are better than others and there is a significant difference in experience between direct response industry service providers. We find that independent firms usually have less biased perspectives than niche service providers, and will provide a more complete understanding of benchmarks and their interrelated factors. At KPI Direct we maintain a rich library of benchmarks across a wide array of product, category, target market and service providers, because they are so important to the success of our clients’ programs and campaigns.

B. Prioritize Your Analysis
It’s prudent to rank the component parts of your business by potential financial impact, especially when it comes to assessing the value leaks. As a general rule you should be able to uncover the most leakage and opportunity by analyzing the cost and performance of your media, and the resulting assessment of the cost to acquire customers (#1). Next highest on the list is typically your cost of goods sold (#2), followed by return rate (#3), shipping costs (#4), call center and agent costs for inbound sales (#5) , fulfillment charges (#6), customer service agent and related call center costs (#7) and merchant processing costs (#8).

Establish benchmarks and frequently assess performance for campaign value leakage.
C. Develop a Process
Conducting a value leakage analysis is undoubtedly one of the most important aspects of designing and operating an effective direct response campaign, but the process is far less impactful if it’s not scheduled and frequent. We recommend that value leakage assessments be done weekly to ensure that programs are on-target and meeting their goals and expectations.

D. Structure is Important – and so are the Learnings
We’ve come to understand that running a detailed P&L by channel on a weekly basis, and developing specific and automated event alarm broadcasts – whether you’re just launching or conducting ongoing campaigns – is essential. Only in this way can you effectively monitor, identify, adjust and correct campaign elements quickly and at the lowest possible cost.

E. Finally, talk with your team often.
Weekly conference calls ensure quick and effective response – even when there is the proverbial bomb in the room; that unforeseen or calamitous event that dramatically alters buying patterns, assumptions and results in a matter of hours!

But take heart! For every bomb there are many more fire sales and opportunities that explode on the scene for the savvy direct marketer who is on top of their game, bringing opportunity to improve your marketing efficiency ratio (MER), increase your average order value and reap additional profits!